LILONGWE-(MaraviPost)-The Finance Minister Simplex Chithyola Banda has disputed fake documents circulating on Monday morning allegating that Malawi Kwacha will be devalued by 150% to cushion forex shortages and aligning exchange rate.
The alleged cabinet paper in our possession also says that they plan to raise fuel price by 100%, retrench workers in the public service and increase PAYE, among others.
But in an interview with The Maravi Post, Finance Minister Chithyola disputes the authenticity of the document describing it as fake.
The Minister says, “Disregard the fake document circulating in social media.
“Its a fake document and the work of disgruntled Malawians working towards denting President Lazarus Chakwera’s government image”.
Chithyola adds, “The document is question is not signed and its contextual statement falls short”.
This comes barely hours Malawians are expected to go to poll on Tuesday, September 16.
LILONGWE-(MaraviPost)-President Lazarus Chakwera’s Tonse Alliance has economically fallen as the Reserve Bank of Malawi (RBM) has adjusted the exchange rate, Malawi Kwacha from a selling rate of MK1,180.29 to MK1,700 to the US dollar effective November 9, 2023.
In a statement signed by Central Bank Governor Wilson Banda, the Central Bank says the 44 percent devaluation is due to, among other issues, supply-demand imbalances and a mismatch in the exchange rate in the cash and TT markets.
“The Reserve Bank of Malawi (the Bank) wishes to inform Authorised Dealer Banks (ADBs) that the exchange rate has been adjusted from the selling rate of MK1180.29 to a selling rate of MK1700.00 to the US Dollar with effect from November 9, 2023.
The adjustment stems from an assessment conducted by the Bank that showed the following; Supply-demand imbalances remain in the market despite adjustments to the exchange rate through the auction system, arbitrage opportunities have resurfaced in the market due to the mismatch in exchange rates in the cash and TT markets, spot checks on some market players indicate that the market can clear import bills at this rate,” reads RBM statement in part.
The central bank adds, “The Reserve Bank of Malawi will closely monitor developments in the market to avoid disorderly behavior among market players that may cause excessive volatility”.
Malawians therefore must brace for further economic hardship as goods and services increase.
Malawi Kwacha devaluation comes barely days ahead of the International Monetary Fund (IMF) team visit slated November 15, 2023.
The IMF team visit aims to give a clear signal on the suspended Extended Credit Facility (EFC) for unlocking donor support to Malawi.
Since assuming leadership in 2020, Chakwera has failed to contain the economic crisis that Malawi Kwacha has not been stable, high inflation, high cost of living, scarcity of fuel, forex, and essential medical suppliers.
Despite economic challenges affecting the country, Chakwera continues with global trotting while draining hard-earned taxes without remorse.
Reverend Chakwera has made 43 foreign trips with countless local trips in three years.
LILONGWE-(MaraviPost)-The Reserve Bank of Malawi (RBM) says the Malawi Kwacha will depreciate from MK1,126 to MK1,180.29 to US dollar from October 2, 2023.
This follows a Foreign Exchange Auction that was held on Wednesday, September 27, 2023.
RBM has been conducting forex auctions since the start of the year as a mechanism for realigning the local currency.
Malawians must brace for further high cost of living as prices of goods and services will be expected to go up.
This comes amid a high inflation rate pegged at 28% from 13% two years ago.
BLANTYRE-(MaraviPost)-The Democratic Progressive Party (DPP) Vice President for Southern Region and the leader of opposition in the National Assembly Kondwani Nankhumwa says the decision of devaluing the Malawi Kwacha by 25 percent as earlier announced by the Reserve Bank of Malawi (RBM) will leave many Malawians more poorer than before.
Kondwani Nankhumwa unhappy with Kwacha devaluation
In his written speech commenting on the move, Nankhumwa says the RBM’s decision has come at a wrong time where there is already panic among consumers who are rushing to stock up on basic food items such as maize flour, cooking oil, soap, rice, sugar among others, before an inevitable rise prices.
The opposition leader observes that the devaluation is likely to push up the rise of fuel and electricity prices, transport costs, the cost of medicine in hospitals and the shrink of the private sector due to the high cost of production thereby affecting less privileged people in the rural areas of the country.
Nankhumwa says it is more stressing that despite advice from the opposition side and other many stakeholders, President Lazarus Chakwera and the Tonse Alliance Leadership continue to travel non-stop both locally and internationally as if they are in paradise.
“The president is still going around on hired private jet often accompanied by a large entourage and he is draining a huge amount of foreign currency in the process.
“I have said for umpteen times that Malawi is a poorest country and that the behavior of our leadership ought to have reflected our economic status.
The President, the Vice President and Cabinet Ministers should not live large like we are an oil exporting country with large amount of cash to spend,” says Nankhumwa.
Adding” It appears my advice has always fallen on deaf ears.
“Chances are that we are always the poorest country at international conferences and forums where President Lazarus Chakwera rushes to attend for a photo opportunity”.
Meanwhile, to minimize the challenges and sufferings that Malawians may swim in as a result of the Kwacha devaluation, the opposition leader has appealed to President Lazarus Chakwera and his Tonse Alliance Government to immediately take the following measures:
President, his Vice, all Cabinet Ministers and government top officials should cut down on foreign and local travels.
President Chakwera,his Vice and all Cabinet Ministers must take salary cuts
Reduce the 16.5% VAT on some of the basic products such as sugar
Stop political rallies that are conducted in the name of development rallies as they do not have substance and add value to the county’s economy
Ministers and senior government officials should stop big and fuel-guzzling vehicles to cut as part of austerity measures
Government must recruit more people into Social Cash Transfer programs such as Mtukula Pakhomo
The Ministry of trade must ban unnecessary imports to save forex, among others
Most importantly, President Chakwera should immediately call for an emergency sitting of MPs to review the MK100,000 tax free-band for PAYE and other taxes that have negative impact on poor Malawians.
BLANTYRE-(MaraviPost)-The Reserve Bank of Malawi (RBM) Governor Wilson Banda insists that the decision of devaluing the Malawi Kwacha by 25 percent has been influenced by the International Monetary Fund ( IMF) officials who are in the country.
This follows public backlash over RBM decision that the move came due to the pressure from the IMF officials who are in the country holding talks with the county’s central bank.
Banda in the middle
But addressing the news conference on Friday May 27, 2022 in Blantyre Banda said the decision is not a pressure from IMF officials as argued.
He said the bank had decided to devalue the Kwacha alone in order to stabilize the country’s economy which has been not stable due to the effects of COVID-19 pandemic, Cyclones Ana and Gombe,and more recently the Russia-Ukraine war.
” No, this is not an influence or pressure from IMF. This decision had already been there before the IMF officials come into the country.
“We have done this as a Reserve Bank of Malawi so as to stabilize our county’s economy which has been affected by COVID-19 pandemic, Cyclones Ana and Gombe, and more recently, Russia-Ukraine war. So, this is not a decision by IMF,” insisted Banda.
The Governor said the excessive borrowing of money by the government which happened between 2016 and 2020 to support fix the exchange rate is what has also greatly contributed to the move as this is giving the bank a pressure to repay the amount which has not been completed till now.
Banda added that on top of stabilizing the Kwacha, RBM believes that the devaluation will also help in realigning the currency with other market fundamentals which will allow the economy to grow.
“We believe that devaluing the currency is also part and parcel of realigning it with the market fundamentals so as to allow our economy to grow
“Here we mean that even tobacco which is our main export commodity will earn more on the market thereby making the country’s economy to grow as well as benefiting the cash crop farmers,” he added.
The Governor assured that with the currency devaluation, the Malawians should expect more forex presence in the country, fuel abundance as well the availability of drugs in the hospitals.
Banda concluded that to stabilize the exchange rates, the RBM will tighten the monetary policy so that there is no excessive borrowing that could result in inflation, while the government will help in tightening the fiscal policy on the same.
In 2012, RBM devalued Kwacha with 33 percent which resulted in the currency start gain and later stabilizing a resumption of fuel supply in the country.
BLANTYRE-(MaraviPost)-Despite Malawians facing the high cost of living, the country’s Central Bank, Reserve Bank of Malawi (RBM), has reached a decision to devalue its local currency (Malawi Kwacha) by 25% effective Friday May, 27, 2022.
In a statement released on Thursday May 26, 2022, RBM said the devaluation is due the liquidity challenges from COVID-19 pandemic, the rising commodity prices following escalation of Russian-Ukraine war and the geo-political tensions coupled with Cyclones Ana and Gombe.
RBM added that the Supply-demand imbalance has manifested in the domestic foreign exchange market in a number of ways, including low foreign exchange supply, declining official foreign reserves, and widening spread between ADBs TT and forex Cash exchange rates.
However, in response to the foreign exchange liquidity challenges and their effects on exchange rate developments, the RBM said it instituted the following short-term measures which did not work out at all:
1. Continuous interventions in the foreign exchange market in order to support importation of strategic commodities and avoid excessive volatility of the Kwacha exchange rate
2. Temporarily introduced mandatory sale of 30% of export proceeds to the Bank within two working days from the date of receipt, and
3. To close arbitrage opportunity arising from the fact that only trads denominated in the US dollar were subject to the reasonable differences on spreads rule.
Meanwhile, the central bank has highlighted that the devaluation will likely add pressure on inflation but says it is committed to prudent monetary and fiscal policies in order to contain all inflationary pressures within manageable limits.
Commenting on the matter, an economist and a lecturer at the Malawi University of Business and Applied Science ( MUBAS) Betcheni Tchereni said Malawi imports most of the commodities from elsewhere and following the devaluation, prices of almost every commodity will go up.
Tchereni said the price of foreign currency on the black market will also go up.
“We are going to see prices of many of those commodities going up. When we say many of those commodities, we mean everything because Malawi imports almost everything.
“Salaries for those who work will remain the same unless we are told they are going to change. Those who do not work at all, they are going to have problems to purchase the commodities and the middle class will be wiped out” said Tchereni.
He added that in the next two to three months, Malawians should expect welfare losses.
The devaluation comes at a time when government is in talks with International Monitory Fund (IMF) team for a new Extended Credit Facility to relieve Malawi from the current economic turmoil.
Reserve Bank of Malawi (RBM) has said a tendency of folding and placing banknotes in wet places by different users in the country has contributed to the loss of the currency worth over MK12 billion annually.
Spokesperson for Central West Region Police, Alfred Chimthere revealed the development to Malawi News Agency (MANA), saying the police together with the Reserve Bank organised a day-long workshop to sensitise the citizenry on the care of the country’s currency.
Speaking on Thursday in Lilongwe during the official opening of the workshop, Currency Planning Manager for the Reserve Bank, Muopeni Ngwalo said they engaged Malawi Police Service and other stakeholders to save the Kwacha Currency.
“We have engaged stakeholders in the city such as directors of ceremony (for ceremonies such as weddings), religious and market leaders, mostly fish vendors among others so that they can assist us to curb these malpractices,” Ngwalo said.
He said Section 54 of the Reserve Bank of Malawi Act of 2018 criminalizes those allegedly found in currency destructive behaviours and could face penalties of a maximum fine of K15 million and seven years imprisonment with hard labour if found guilty.
Commissioner responsible for the Central West Region, Merlyne Yolamu said police through community policing will continue sensitizing the public on their role and responsibilities on the need of taking care of the Malawi Kwacha notes.
“We must spread the message on the care of currency in order to save billions of kwacha that are lost by the reserve bank annually through banknotes replacements,” she said.
She highlighted that police observed that most kwacha currencies are damaged during different activities such engagements, send-offs, weddings, paper Sundays, anniversaries and markets days, especially for those selling fresh fish, just to mention a few.
During his presentation, Senior Superintendent Mojah Phiri who is also the Police Deputy Director of Prosecutions Branch dwelled on the enforcement of the law to protect the currency and the participation of community policing in the matter.
On his part, Assistant Superintendent Ralph Mpophiwa of Community Policing Branch, focused his presentation on the role and responsibility of masters of ceremony and market leaders in the care of the currency.
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